tds consequenses

Consequences of Default

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C A S H A I L E S H R A T H IACA, M.Com

B A H E T I & S O M A N IChartered Accountantswww.bandsindia.com

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Amounts not deductable u/s 40(a)(ia) in Amounts not deductable u/s 40(a)(ia) in computing the income under Profit and Gains of computing the income under Profit and Gains of business or profession.business or profession.

i) When TDS is deductable and has not been deducted.i) When TDS is deductable and has not been deducted.

ii) After deduction, has not been paid during the ii) After deduction, has not been paid during the previous year or time prescribed.previous year or time prescribed.

- For Non Government Payer- For Non Government Payer

Within one week from last day of the month in which Within one week from last day of the month in which deduction is made or deduction is made or

credited on the date of making up of accounts upto credited on the date of making up of accounts upto within 2 months of the expiry of the said months, exceptwithin 2 months of the expiry of the said months, except

- Salary (192) winning from Lottery (194), winning from - Salary (192) winning from Lottery (194), winning from Horse Racing (194BB), payment of NSS (194EE) Horse Racing (194BB), payment of NSS (194EE) Repurchase of Mutual Fund (194F)Repurchase of Mutual Fund (194F)


Amounts not deductable u/s 40(a)(ia) in Amounts not deductable u/s 40(a)(ia) in computing the income under Profit and Gains computing the income under Profit and Gains of business or profession.of business or profession.

However, the deduction is allowed for the However, the deduction is allowed for the Expenditure made in the month of March and Expenditure made in the month of March and TDS on the same has been paid before filing of TDS on the same has been paid before filing of Return or Due date of filing of return. And in all Return or Due date of filing of return. And in all other case before last date of financial year.other case before last date of financial year.


Date on which TDS supposed to be deducted

Actual Date of Deduction

Due date of Payment

Date of Actual Payment

Year of Allowance

26.06.09 26.06.09 07.07.09 07.07.09 2009-10

26.06.09 26.06.09 07.07.09 07.08.09 2009-10

26.06.09 26.06.09 07.07.09 07.04.10 2010-11

26.06.09 26.06.09 07.07.09 31.03.10 2009-10

26.03.10 26.03.10 07.04.10 07.04.10 2009-10

31.03.10 31.03.10 31.05.10 07.06.10 2009-10

26.03.10 26.03.10 07.04.10 07.10.10 2010-11

26.03.10 Not Deducted

07.04.10 Not Deducted

Not Deductible

26.06.08 26.04.09 07.04.09 07.04.2009 2009-10

26.06.08 26.04.09 07.04.09 07.04.2010 2010-11


Amounts not deductable u/s 40(a)(ia) in Amounts not deductable u/s 40(a)(ia) in computing the income under Profit and Gains computing the income under Profit and Gains of business or profession.of business or profession.

What if there is short deductionWhat if there is short deduction What if the TDS has not been made for Payment of What if the TDS has not been made for Payment of

Capital Asset.Capital Asset. Section 192 is not coveredSection 192 is not covered However Section 40 (a) (iv) ensures that TDS has However Section 40 (a) (iv) ensures that TDS has

been done on Salary for Payment of PF.been done on Salary for Payment of PF.


Liability u/s 201Liability u/s 201

(1) Penalty – assessee in default u/s 221 equal (1) Penalty – assessee in default u/s 221 equal to the amount of tax in arrears. to the amount of tax in arrears.

(1A) Interest @ 1% per month(1A) Interest @ 1% per month

Both the above are consequences of Both the above are consequences of

- Not deducting or- Not deducting or

- Deducted and not paying to the Central - Deducted and not paying to the Central Government.Government.

(2) After deducting not paying also leads to a charge (2) After deducting not paying also leads to a charge being credited on the assets of the payer.being credited on the assets of the payer.


Section 276BSection 276B

Fails to pay to the credit of Central Fails to pay to the credit of Central Government, tax deducted at source by him as Government, tax deducted at source by him as required by or under the provisions of required by or under the provisions of Chapter XVII-B. Chapter XVII-B.

Imprisonment Period 3 months to 7 years Imprisonment Period 3 months to 7 years and with fine. and with fine.

Section 271CSection 271C

Penalty for failure to deduct tax at source as Penalty for failure to deduct tax at source as required or under the provisions of Chapter required or under the provisions of Chapter XVII-B. Penalty Equal to Tax.XVII-B. Penalty Equal to Tax.


Section 272A(2)(C) Section 272A(2)(C) FAILURE TO FURNISH THE TDS RETURN –FAILURE TO FURNISH THE TDS RETURN –If the deductor fails to furnish the TDS return within If the deductor fails to furnish the TDS return within due date, he shall be liable for penalty of Rs.100/- due date, he shall be liable for penalty of Rs.100/-

per per day for the period of default.day for the period of default.

Section 272A(2)(g)Section 272A(2)(g)

AILURE TO FURNISH A COPY OF AILURE TO FURNISH A COPY OF CERTIFICATE - If the deductor fails to furnish a CERTIFICATE - If the deductor fails to furnish a

certificate to the payee within the prescribed certificate to the payee within the prescribed time, time, he shall be liable for penalty of Rs.100/- per he shall be liable for penalty of Rs.100/- per day day for the period of default.for the period of default.

Section 272BBSection 272BBFAILURE TO APPLY FOR TANFAILURE TO APPLY FOR TANIf the deductor fails to apply for TAN within the If the deductor fails to apply for TAN within the prescribed time, he shall be liable for penalty of prescribed time, he shall be liable for penalty of

Rs.10000/-.Rs.10000/-.

Consequences of Default The person responsible for deducting tax The person responsible for deducting tax

at source will be held as assessee in at source will be held as assessee in default and the tax he ought to have default and the tax he ought to have deducted at source or he ought to have deducted at source or he ought to have deposited will be collected from such deposited will be collected from such person. person.


If the person responsible for deducting or If the person responsible for deducting or depositing the tax at source, does not pay depositing the tax at source, does not pay or deposit the TDS then Interest or deposit the TDS then Interest u/s.201(1A) @ 12% p.a. from the date on u/s.201(1A) @ 12% p.a. from the date on which the tax was deductible to the date which the tax was deductible to the date on which such tax is actually paid will be on which such tax is actually paid will be levied on the amount of such tax.levied on the amount of such tax.

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tds consequenses

Economy & Finance